Reply to Julio Huato: unequal exchange, equal exchange, primitive accumulation of money capital and primitive accumulation of industrial capital

Jurriaan Bendien bendien at
Sat Aug 30 09:33:43 MDT 2003

Hi Julio:
> This is all fair.  But what do you mean by "no unequal exchange"?
> exchange in the market?  If so, How can "primitive" accumulation involve
> voluntary market exchange?

Marx's discussion of the modalities of exchange in Das Kapital is by no
means exhaustive in my opinion, he just provides general principles. He
wants to discuss exchange in a foundational way, which abstracts from all
sorts of variations, to understand the "constants", if you like. Otherwise
you do not know what a variation is a variation from, and you cannot
integrate more variations in a systematic and rational way. This is a
frequent problem in neoclassical economics where there is not way of telling
what is a constant and what is a variable other than in a crude,
relativistic empiricist way, causing eclecticism which falls from one
paradox into another. Marx seeks a coherent, comprehensive
conceptualisation. So Marx asks for example, "what determines the value of
money, commodities and capital if supply and demand for them coincide ? His
argument is, that if you cannot explain this, you cannot explain anything at
all, you just go around in a circle, supply is explained by demand, and
demand is explained by supply and so on. Instead of explaining exchange
processes, you assume them.

Similarly, in most of Das Kapital, Marx presupposes equal exchange rather
than unequal exchange. His aim is threefold: 1) to show that exploitation of
wage labour can occur even if the exchange is formally an exchange of
equivalents - really it is an equal exchange of unequal values, it seems as
though labour time is paid for but in reality labour capacity is paid for,
and this labour capacity can form an output which exceeds the reproduction
cost of the worker 2) that if you cannot explain the basic circuits on the
basis of equal exchange, then you cannot explain anything at all, you just
have variations from variations of exchange; 3) the way the law of value
operates in a developed capitalist economy is such that the tendency is
towards reducing, braking or eliminating unequal exchange, principally
through the compulsion of competitive processes, so that prices gravitate
towards real production prices.

Nevertheless, "unequal exchange" remains a fact of life in capitalist
society, and to the extent that no really competitive markets exist such
that prices are levelled out to conditions approximating equal exchange,
surplus-profits are obtained from unequal exchange. Marx himself doesn't
really make that very explicit, but if you relate his abstractions to a real
capitalist society, this is obvious. It is then also obvious, then many more
modalities of exploitation exist than Marx describes systematically, for
example, through blocking competitors by various means, and thus being able
to raise prices for capital, money, commodities or labour. There is no
"perfect competition" and part of the competitive struggle consists
precisely in blocking competitors.

As regards primitive accumulation on the basis of equal exchange, this is a
special case, which can occur when somebody possesses only use-values and
exchanges those use-values for an amount of money which accurately reflects
their real value, as an original accumulation of capital, since the
use-values did not function as capital prior to that time. It's similar to
the Oxfam idea of fair trade sometimes, you get these people who live in
subsistence economy to exchange their use-values for a sum of money which
reflects the real value of the use-values, so that they accumulate a stock
of money capital which enables them to integrate into the market, go into
business and so on. Another case of primitive accumulation through
equivalents might simply be saving up money from some ordinary source of
work. Marx's whole point however is that, in the real world, these are
marginal cases, and not very significant economically.

The way I define primitive accumulation is as original accumulation, and
this problem simply refers to how you get your original stock of capital
that enables you to establish yourself as owner of capital who attracts a
surplus-value in the form of interest, rent or profit. Here there are a wide
variety of permutations possible. The "primitive accumulation" which Marx
describes, involves the separation of labour from their means of production
and the privatisation of those means of production. This could occur in all
sorts of ways, for example through indebtedness. I described a some cases in
various mails. But the cases which Marx describes are only cases which
relate to the complex of circumstances which generated industrialisation.

But, to get out of schematism and avoid annoying dogmatists like Melvin P.,
read a good book on the economic history of feudalism and read Paul Baran's
The Political Economy of Growth, Ragnar Nurkse and people like that.

You will discover, that both capital and wage-labour did exist in medieval
times for centuries, except this did not lead to industrialisation or a
broader cumulative dynamic of capital accumulation. Trade was inadequately
developed; there were technological obstacles; requisite social relations
and legal superstructures did not exist; the bourgeois could not guarantee
his private assets long-term against attack, taxing, debts and plunder, and
so on.

If you read Paul Baran, you will notice that, in answering the question of
why primitive accumulation of industrial capital failed to occur in the
third world was NOT because of a lack of capital, it was NOT because
propertyless proletarians did not exist, and it was NOT because industrial
production was not profitable in principle or the rate of exploitation too
low. Rather, the indigenous capitalists lacked a real motive to transform
their money capital into industrial capital, within the given social set-up,
the given class relations, and the given relationship with the imperialist
powers. They had no specific class interest in comprehensive modernisation.
So what happens here, is that you do get a "separation from the means of
production" and you do get propertyless proletarians looking for work, and
you do get privatisation of land etc., but you do not get a genuine process
of the primitive accumulation of industrial (production) capital, only the
primitive accumulation of money capital.



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